Employer-Based System
What Is It?
Employers have the option to provide insurance coverage to employees or to pay a tax funding a public program that insures all individuals not covered at work. Lowincome individuals receive subsidized coverage.
How is it financed?
The multiple-payer system remains in place, with employer and employee contributions funding employer-provided coverage. Payroll taxes for nonparticipating employers, enrollee premiums and government funds previously used for Medicaid and other programs pay for the new public insurance program.
How are costs controlled?
Universal access prevents "cost shifting" -increasing costs for the insured to finance care for the uninsured. Also, employer-based proposals include a range of cost containment strategies such as: a federal panel setting national targets for health care spending; negotiated rates for providers; standardized claims forms; funding for research to reduce unnecessary care; emphasis on preventive care; and promotion of managed-care arrangements.
How is it administered?
The government-either a federal or state agency-and private insurers (including employers) share administrative responsibilities.
Is supplemental insurance available?
Yes. Employers can offer coverage beyond that mandated by law, and individuals are free to purchase additional coverage.
ProsProvides universal coverage without a total restructuring of our health care system.
Permits an active government role in containing health care costs.
ConsEmployer mandate to provide coverage or pay a tax could be a hardship for some businesses, especially smaller ones.
Effectiveness at controlling costs depends on the specifics of individual proposals.
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National Health Insurance (Single Payer)
What is it?
All citizens are covered by a public insurance program for a minimum basic level of health care. Citizens receive care from a provider who, in turn, seeks reimbursement from the government.
How is it financed?
The multiple-payer system is replaced with a single payer. Care is financed through increased general revenues-taxes-that take the place of insurance premiums.
How are costs controlled?
Universal access prevents "cost shifting," and a single payer boosts efficiency while cutting administrative costs. Plus: a federal panel sets a budget for national and state health care expenditures; fixed budgets are set for hospitals; and rates are negotiated for providers. Plans also fund research to reduce unnecessary care, emphasize the use of preventive care and promote managed-care arrangements.
How is it administered?
Federal and state agencies are responsible for administering the health care system. Private insurers exist only in a limited capacity.
Is supplemental insurance available?
Yes. Insurance for additional benefits is available under most proposals.
Pros Establishes "global budgets" for health care expenditures to contain health care costs.
Lowers administrative costs and increases efficiency by replacing a multiple-payer system with a single payer.
Cons Requires new taxes on individuals and businesses.
Reduces availability of some services.
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Private Market-Based Reform
What is it?
Competition among providers is fostered by new economic incentives increasing consumer cost-consciousness while expanding access. Government programs are added or expanded to provide coverage for those unable to afford health insurance.
How is it financed?
The multiple-payer system remains in place. Additional or expanded government programs for those without coverage-together with financial support for individuals to acquire coverage-are funded by tax revenues raised from limiting the current exclusion of health benefits from employees' taxable income.
How are costs controlled?
Universal access prevents "cost shifting," and competition increases efficiency while reducing costs. Plans also promote managed-care arrangements, emphasize preventive care and frond research to reduce unnecessary care.
How is it administered?
The government-both federal and state and private insurers share administrative responsibilities.
Is supplemental insurance available?
Yes. Insurance companies will continue to provide individual coverage.
Pros "Budget neutrality"-no new taxes are needed to make the proposed changes.
Requires very little structural change to the existing system.
Cons Features no direct cost-containment strategies.
Is an untested approach to national reform that many argue will not make the changes needed to sufficiently improve our system.
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November-December 1992
February 1993
President's Message (Arlene Ellis)